Math 1050 Credit Card Debt Assignment NameGltanA acceet

You have received your monthly credit card statement and must now deal with the financial realities of last month's
birthday celebration. While your milestone in years was deserving ofa celebration, dealing with the $2000 in credit card
charges will require some planning.

Your credit card statement lists the APR (Annual Percentage Rate) for your balance to be 14.4%. This is the yearly
interest rate the credit card company uses in calculating interest due on your balance. The credit card company
compounds interest monthly. Your monthly interest rate on credit card charges will be:

APR 0.144
= 0.012
12 12

The minimum payment required by your credit card company is $25/month. Assuming that you do not make any new
charges to your account, answer the following questions to help you determine the best plan for paying off this credit
card debt.

1. To begin with, let's check out the plan of only paying the minimum amount due each month. To get a feel for how
this will affect the balance, finish filling in the following table using the minimum monthly payment of $25. Round
each answer to the nearest cent.

Month Old Balance Interest Payment NewBalance

1 $2000.00 $24.00 $25.00 $1999.00
2 $1999.00 $23.99 $25.00 $1997.99
$1997.99 03.96 $25.00 96.11_
4199%.4T 5.16 $25.00 1915.13
1995.913 03.95 $25.00 1494. 83
5 1414, 66 33.14 $25.00 413 .Sa
7
1993.63 23.13 $25.00 113,7S
? 1992.n5 03.41 $25.00
$25.00
1411.e
33.0 19 1O.56
10 133.8 $25.00 4 14845
11 11$,45 23.31 $25.00 31955 32
12 123,bo $25.00 1167.14
2. What is the total amount that has been paid to the credit card company at the end of the first year?
1300 co

3. How much of the original balance has been paid off at the end of the first year?
19.8
Math 1050 Credit Card Debt Assignment Name eana Facc&nei

4. From looking at the new balances over the first year, how many years do you think it will take to pay off the $20007
(This is a guess so there is no wrong answer. Before moving on, write down your best estimate.)

10 yars

5. A formula for calculatingthe payment, P, required to pay off a debt of amount D in M months with monthly
interest rate i is
D.i
P
1-(1+i"
Solve this formula for M , where M is the number of months it willtake to pay off a debt D. Attach all your work in

solving for M to the end of this assignment.

tn()

M= - lai)

6. Useyourformula for M to fill in the following tablefor the given values of P, using D-s2000.00 and i=0012.
Attach all your work to the end of this assignment.

Monthly Payment P $25.00 $50.00 $75.00

Number of Months to Pay off Debt

(Roundtotwodecimal places.) O.4S 51.83 39.33

Number of Years to Pay off Debt
(Round to nearest tenth of a year.) 4. 0.1
Total Amount Paid to Credit Card Company
(Roundto nearest dollar.) n4% 135

7.(a) How large would your monthly payment have to be in order to pay offyour debt in 12 months? Round up to the
next nearest cent.
300cl0.09)
0.13336A1384 : 7.4508665153
P- T-(0.0)

The poymend voud need \o be n9.15s

b) What is the total amount paid to the credit card company, rounded to the nearest dollar?
Total i14.95 1o

Total 159
Math 1050 Credit Card Debt Assignment Name GleanaFauent

8. What is the best plan for paying off the $2000? Why?
The best plan uAcotd Dcpayin a lest he 114.05 and py it ot in 1a months

cess. The derence betwee prying the S minimim d pay'ne&114.S weuld

be Saans o 4581.

9. What is the worst plan? Why?

anghe MAmdM Pymea is he vworst. T yo oaly py the mnimun you
u ead up paync Mcre thon 3x in the eid.
your original balance

10. What should you do if you cannot afford to make the payments required by the best plan?

aS as to
yo Cn, bu alwoys nake Sure Py Moru hon the
minmm pymtnt, Then in
wontns wwere you Ccn y to y Mer non the bet
lan.

11. What are two things that the average consumer can learn by completing this assignment?

instend o SiA aCredi Cord wW

i. T you Vp to Dy wings yoU

Yosr ss ot ot
Mony

ii. Aays paymord

MA M0 M Paymen, even Ale more wil
Save Yo a \ot o monuy in the nd.
 Glenna raccene
Di

P-u") =Di
P-PA)" =D
-P : D-P

M -1n).

95 -3.018315634
M Inl0.010) M1a.049) M-0.ON28510a

385
M30.84588436 Years 1D e c s 3,4815
tetal pod A,35 - 35 dotals 46.3S

Intoso) 0.GS3q0G4G74
M:lali.o9) M: -0.a1983510a
M- uo)

M 54, 83018S3IS years 10

yenrs .5683333535
otal I741

no-c) 0.3SCGYKOS
$15 M a(l.o1g) M-lalI.01 M 0.ci s570

.3
M 39.330941846 yCoars 1a
yes 6IAGGool1
7
total pud 32.33 1 S 44.15